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Visualizing The Black Hole Of State Revenues
The following chart from Stateline will be quite critical to evaluate going forward as states increasingly ponder just how to tweak their revenue formulas in order to not only get away from the precipice of insolvency, but to pay back the tens of billions borrowed from the Federal government to fund unemployment pay.
And as for the abovementioned borrowings to fund unemployment insurance payments, the Post and Courier has the following story highlighting that not only are states in the red, they also have a $31 billion hold to repay to Uncle Sam.
South Carolina and other cash-strapped states borrowed a total of
about $31 billion from the federal government over the last two years
to provide their unemployed workers with benefit checks, and now as the
country climbs out of recession the states must find a way to pay it
back.
John Rainey, South Carolina's chief economic adviser, said the state
needs to take calculated steps to repay its $800 million debt while
some others hold out hope that the federal government will forgive the
loans.
Odd: taking a note from Wall Street, these states can not be that stupid to think they won't be able to get some sort of concession or outright forgiveness of all this debt? Sure enough:
South Carolina does not yet have a plan to pay back the money.
U.S. House Majority Whip Jim Clyburn, D-S.C., said it is too early
to talk about forgiving the debt, but he and other Congressmen are
studying ways to address the issue.
U.S. Sen. Lindsey Graham, R-S.C., had not taken a public stance on
the matter so far, but his office said the senator will work with state
officials to make sure South Carolina is treated fairly and equitably
in whatever action the federal government may take.
State Sen. Greg Ryberg, R-Aiken, said he would support a decision by
the federal government to forgive the debt, but it is the state's
responsibility in the meantime come up with a plan to pay it back.
And once the debt forgiveness migrates to the state level, we are confident that consumers will be next. After all, all is fair in love and currency devaluation.
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Politicians are a sad lot because they refuse to do the honorable and honest things. Rather they pander to retain their power and damn the costs for the future.
We, as a society, are sadder still because we allow it.
"We, as a society, are sadder still because we allow it."
Yes, I understand these politicians are adults and thus should know right from wrong. Yes, yes and yes, I understand that this shouldn't be the way things work. But it is.
While we might be angry with our 5 year old child when he or she lies for the 9th time or once again has his hand in the cookie jar, we understand that the child is doing what every child does, which is the push the envelope of acceptable behaviour, to push the parents buttons, to act like a child.
If we are reasonably well adjusted adults, we accept that our part in the role of parents is to continuously and constantly correct this behaviour, to say "No" and "Stop" and "Time out" or what ever method is used in our household to teach the child that there are consequences for this behaviour.
Clearly we-the-people, the so called adults at this sleep over, have decided collectively and individually that we will not put a stop to this. We, all of us, are acting as if the child throwing the temper tantrum in the middle of the supermarket is not our child. Where are the parents? Why won't someone do something about this?
Why won't we do something about this folks? Why?
We will. Eventually.
We are slow to anger. Watch the outliers, like Joe Stack.
Is there still time for us to change our leaders and for our leaders to change course?
Because Democracy Inc. has succeeded in making it virtually impossible to do anything to stop it. The sheeple are not paying attention, and will not as long as the supply of Cheetos and American Idol reruns remains constant.
National Voter Turnout in Federal Elections: 1960–2008
This page provides information about voter statistics, including age of voting population, voter registration, turnout, and more.
Year Voting-age
population Voter
registration Voter turnout Turnout of voting-age
population (percent)
2008* 231,229,580 NA 132,618,580* 56.8%
2006 220,600,000 135,889,600 80,588,000 37.1%
2004 221,256,931 174,800,000 122,294,978 55.3
2002 215,473,000 150,990,598 79,830,119 37.0
2000 205,815,000 156,421,311 105,586,274 51.3
1998 200,929,000 141,850,558 73,117,022 36.4
1996 196,511,000 146,211,960 96,456,345 49.1
1994 193,650,000 130,292,822 75,105,860 38.8
1992 189,529,000 133,821,178 104,405,155 55.1
1990 185,812,000 121,105,630 67,859,189 36.5
1988 182,778,000 126,379,628 91,594,693 50.1
1986 178,566,000 118,399,984 64,991,128 36.4
1984 174,466,000 124,150,614 92,652,680 53.1
1982 169,938,000 110,671,225 67,615,576 39.8
1980 164,597,000 113,043,734 86,515,221 52.6
1978 158,373,000 103,291,265 58,917,938 37.2
1976 152,309,190 105,037,986 81,555,789 53.6
1974 146,336,000 96,199,0201 55,943,834 38.2
1972 140,776,000 97,328,541 77,718,554 55.2
1970 124,498,000 82,496,7472 58,014,338 46.6
1968 120,328,186 81,658,180 73,211,875 60.8
1966 116,132,000 76,288,2833 56,188,046 48.4
1964 114,090,000 73,715,818 70,644,592 61.9
1962 112,423,000 65,393,7514 53,141,227 47.3
1960 109,159,000 64,833,0965 68,838,204 63.1
*Source 2008 election results: http://elections.gmu.edu/Turnout_2008G.html.
n.a. = not available. NOTE: Presidential election years are in boldface.
1. Registrations from Iowa not included.
2. Registrations from Iowa and Mo. not included.
3. Registrations from Iowa, Kans., Miss., Mo., Nebr., and Wyo. not included. D.C. did not have independent status.
4. Registrations from Ala., Alaska, D.C., Iowa, Kans., Ky., Miss., Mo., Nebr., N.C., N.D., Okla., S.D., Wis., and Wyo. not included.
5. Registrations from Ala., Alaska, D.C., Iowa, Kans., Ky., Miss., Mo., Nebr., N.M., N.C., N.D., Okla., S.D., Wis., and Wyo. not included.
Source: Federal Election Commission. Data drawn from Congressional Research Service reports, Election Data Services Inc., and State Election Offices.
CD, I hear where you're coming from. The difference is that I can grab my misbehaving 5-year-old by the scruff of his neck and remove him from the situation. (We left many supermarkets and restaurants when our kids were toddlers. They eventually learned cause and effect, and are now exceptionally polite teenagers.)
In contrast, my experience with calling, faxing, writing and emailing my political representatives is that they push the IGNORE button and go about their merry way.
Of course you are correct. With the children, there is a direct connection to the cause and the effect. We can immediately call the child to task and if nothing else, stop the offending behaviour. Plus there is the "ownership" experience, where we feel personally responsible for our childs' behaviour.
Not so with politicians. There was a poll published a few weeks before the 2008 elections. Over 80% of the "people" felt politicians on a whole were corrupt and should be removed from office. However, when asked if their politicians (meaning the politicains they vote for) were corrupt, less than 20% said "yes", meaning it's not my problem, it's your problem.
Our society generally holds the parents responsible for their kids behaviour. There really isn't anyone holding us responsible for our politicians behaviour, other than us. Since we can hide within the anonymity of society, we can always point the finger at someone else, acting just like our own 5 years old child.
Now, where is that GI Joe with the Kung Foo grip?
An additional problem is that a single child can be dealt with in these ways. Now imagine that the children are part of a collective organization and have each other's implicit backing and are being told what to do by the teenagers. Now what happens when you make an example out of a few of them? They arrange backdoor deals for the ones who were martyred and make sure they are taken care of with sweetheart positions outside of the limelight and then point and say "see, the troublemakers are gone, better times are ahead."
So the politicians are just a bunch of suit-wearing gang punks?
Truthfully, that explains it all.
Laziness. Apathy. And because people have figured out that it just makes the mose sense to vote for the guy that will give them the most free stuff, damn the consequences.
And lack of awareness from those who don't vote like that. I honestly did not see that aspect of the American culture. I thought voters were ideologically different instead of lazy and apathetic. I guess I need to get out more.
For one thing, our 5-year-old child is holding the no-limit credit card.
Most people would agree in the abstract that adding state debts to the national debt is scandalous and irresponsible.
But ask for personal sacrifice, in the form of higher taxes or reduced services in order to repay their own state's debt ... well we might have to think on this some more ...
I think soon we will realize the solution is to take away the jar until the kid grows up a bit.
Or just wait for it, because it's almost empty anyway.
You lie!
California has a projected budget deficit of $20 billion dollars for 2010-2011. However, this does not include a negative balance of $6 billion in UI funds owed to the fed.gov. Since the UI deficit is increasing each month to the tune of $500m+, we're looking at $12 billion at the end of the year.
The total proposed California budget for 2010-2011 is around $100B, so the 20+16 puts us in the territory of running a 35% deficit. Since (state) debt has increased 80% over the last 3 years to $50b ($100b if one adds in local), any reconciliation is going to come out of expenditures.
So how does one cut 20% (assuming the UI debt is forgiven by Uncle Sam)? Well, considering that total state employment costs are around $25B, you could fire everyone and still almost run a deficit. So what's gonna happen is that it's going to come out of schools (previously untouchable) and social spending.
I forgot to add that pensions are significantly underfunded, so if we add in wandering students, out of work teachers/gov't employees, the unemployed who are no longer receiving support and retired cops without pensions, if 2010 doesn't do the trick, 2011 is when this thing is gonna blow.
And some people think we're looking at hyper-inflation. Snort.
How can you make such a great case for hyperinflation and then throw it all away with such a goofy line at the end?
Hyperinflation is simply monetary panic in the face of crushing deflation. The crushing deflation is a cause of and prerequisite for hyperinflation. You have made the case for hyperinflation pretty well, bravo.
Asset prices drop, forcing the relative value of debt to increase, so the absolute value of currency ... declines?
I fall in the camp that believes there is a hard $USD oil peg - the days of unbridled QE are done.
I failed to mention that the state of California is hoping the fed.gov contributes $10b to state coffers so that they only have to cut $10b. (10+10=20 total deficit.)
The fed.gov money is not forthcoming. This is telling those who spend their time combing through 1,000 page budgets what is really goin' down.
I'm in agreement with B9K9. There might be a "less than hard" USD/oil peg, though... but there will certainly be a limit to which the cost of fuel will stir the masses.
In a nutshell, I would find it very difficult to make a case for hyperinflation if wages and asset values are providing the headwinds. Even with massive fiscal and monetary stimulus, wages are stagnant at best and asset values (except for stocks) are down.
Fed.gov money not coming is going to be a real political football come re-election time. We'll see how the unsettled masses handle that deal.
The value of debt doesn't increase. The debt is defaulted on; the debt is worthless.
Exactly - but the ultimate denouement does not occur until the final act.
We're still in Act II (The Empire Strikes Back). At some point, a decision is going to have to be made: print or fold. Either gets you to the same end result: the value of debt goes to -0-.
I believe a hard oil peg exists, hence I think they are going to admit defeat and cut the budget. If the Democrats walk away from Nov, then the Republicans will get to deal with the resulting deflationary depression.
The only other alternative is to position our carrier groups around the Persian Gulf to ensure access to ME oil at the price we want & can afford, then fire up the printing presses.
No massive occupation forces sitting in Saudi Arabia controlling our vital life lines, no QE. As usual, it always comes to down to might vs right.
No one ever cuts the budget, for any reason. They didn't spend the last two years nationalizing, backstopping, and blowing this massive deficit just so they can suddenly become responsible.
They are going to print.
Beautifully said.
The only other alternative is to position our carrier groups around the Persian Gulf to ensure access to ME oil at the price we want & can afford, then fire up the printing presses.
Done, and done. Our armies sit astride the middle east. You think there'll be no currency crisis?
Pricing realities are different in other countries.
Be a good idea to go visit latin america and take a gander at fuel or merchandise prices.
The notion that prices "can't" go past a certain point or else people won't live with them...wtf are they gonna do, make Cantarell pump more?
The interest is eating the money supply; how long will that be endured before they force a devaluation?
They fear deflation because it is a MATHEMATICALLY self-reinforcing condition. Credit *must* grow by at LEAST the prevailing rate of interest on the money itself.
This is very easy to demonstrate. Suppose the prevailing funds rate is 5%. At the end of the next year, someone must borrow (grow credit) at least another 5% or else the interest repayment comes out of the aggregate monetary base.
Credit growth has stopped. But interest remains.
Well said!
The seed of hyperinflation lurks within every Treasury auction, since none will ever fail, but the money that pays for the Treasury's debt will increasingly be of questionable provenance. You can pay your bills, or you can print. With relentless deflation, the choice is to default, or to pay with printed money. Where we are is that we are paying with some real money, the rest printed, and the percentages of each will shift over time, in the wrong direction.
Knocking on the Central Bank’s Door
(3 Paths Forward)
Thomas M. Hoenig
President
Federal Reserve Bank of Kansas City
Peterson-Pew Commission on Budget Reform Policy Forum
Washington, D.C.
February 16, 2010
http://www.kc.frb.org/speechbio/hoenigpdf/Washington.DC.Fiscal.02.16.10.pdf
So what if it rains in Seattle?
It rains in Seattle? O.o
Bah! It's not that bad, CNBC said so...
[/sarcasm]
I love how state spokespeople get on the Boob tube and recite how the states can not go bankrupt and must meet
pension obligations, Bonds, etc. Bankruptcy not an option.
Yeah Right. Everything conceived by the human mind and built
by human hands will fail eventually.When one adds in the current level of corruption and incompetence, its a sure bet.
This thing is going to blow, its completely unsustainable.
Soon, we will be letting out prisoners, that combined with
our already reduced police force ought to be real interesting....Welcome to the Barnyard, Welcome to Nature,
its going to be brutal....
Do many people in Washington take a drive to Oregon to buy things?
If they live close to Oregon they do but it does not happen as much you would think it would. Most of the people in WA live in the central Puget Sound region so its a 2-3 hour one way trip. Not worth it for a Costco trip. And the prices in Oregon reflect the cost of all the other taxes. You save the sales tax but often the goods cost more. Total savings is not as high as you think and when you add the travel time and gas money, it is not worth it.
Funny how that works out. If most the people on WA lived on the Columbia, the 2 states would not be able to have such different tax systems.
Yep. Opportunists living along the sparsely populated Columbia river corridor have little overall impact.
Taxes on food in WA are either non-existent or minimal, along with prescription meds - so buy other items online and have it shipped in - instant gratification is the only reason I buy non-local products from non-local businesses.
+1 "lookma"
Here in AZ my property tax assessments (several properties) for 2011 were down 20-30%. Unless they mess around with the multiplier (which would trigger a revolution) real values have finally come home to roost for the tax assessor. There will be a 20%+ drop in property taxes next year here in AZ. The governor is trying to get a sales tax increase, but there is no will to get this passed. AZ is in worse shape than CA, but it is a smaller number.
As Dr. Marc Faber recently said, "we are doomed". Several state governments will collapse this year, AZ may be one of them.
States have no choice but to return to pre-2000 spending levels. One good reason to NOT be optimistic about employment figures for the next couple years.
The three-legged stool of bubble/bust/reflate is missing a leg this time for the sun and sand economies.
Most of the major NY newspapers had an article on the number of PUBLIC employees who make over 100k.
It has nearly doubled since 2003.
Forget 2000, spending needs to party like its 1989!
That's why I estimated with " pre-2000" spending levels......hoping to retain some optimism, misplaced or not. I think the spend-a-holic States with heavy union employment burdens will be far worse off.
$31 billion!?! That's it? Goldman gets this much from the Fed EVERYDAY.
Gordon, this is, and will become, a huge problem as we move forward in this crisis. This number will easily double. Protests, even a few small riots here and there, will emerge as states will eventually delay, and even suspend tax rebates and refunds. We hope you're well our friend, hang in there...
It was just a sarcastic observation on how the real economy is scrounging around for money (not that I support the states' drunken sailor spending) yet the banksters are swimming in oceans of it. BTW, what we witnessed in 2008 was just a trailer; we have yet to see the full movie.
totally agree with GG - and SC is just pushing for they wanted to use the stimulus money in the first place.. to pay off their debt.. right or wrong that was their agenda... until Stanford showed that he was getting his stimulus elsewhere
http://www.cbsnews.com/stories/2009/06/04/politics/main5063056.shtml
The fact that the government is seeking a request for comments on annuitizing our retirement plans is an absolute indicator on just how desperate the situation is.
(government scrounging around for money, especially after
the US debt selloff in December)
Hard to believe retirement money confiscationit is even being discussed.
Long Au
Long Ag
Long CH4
Long Pb with a BL-C(2) backer
This thing is going to get crazy......
The banksters' conceptualization and that of the money system is that the real economy serves them, not the other way around.
Their money is supposed to make money off of your doing something. The idiots in the supply-side credit Fed must have believed that there were tons of people out in the real economy just chafing at the bit to go deeper into debt when the reality that anyone could see was that they were at saturation.
But, the Fed's job is to save its member banks and banking system even at the expense of every aspect of the real economy. Bankers celebrate their own indispensibility on a rather frequent basis; "credit is the lifeblood of an economy." Not production or energy, mind you...credit. That's what makes the sun come up.
The banksters were "supposed" to use this cheap money to lever up and DO something. The problem is that even at 0%, there is nothing economical TO do. So, they sit on it. The failure to lend and to borrow seems to be operative proof of my thesis that real economic activity is of negative profitability in the aggregate now. If you can't turn a profit at 0%, then you're freakin done.
And that is the BIG issue. How can you tell people 'you have to sacrifice and cut' when the banksters still have jobs and are collecting their bonus (or as should I say Bone Us). I am not a big fan of the public workers union but seriously, why should they give one cent back when all the Wall Streeters are still employed?
The bill is coming due for TARP and it will be paid in strikes and riots and unrest. No one, NO ONE is going to accept the 'we have to all sacrifice and cut back now'. Not while the boys at GS are still walking around free.
New York is so broke they rejective Tubo tax e-file
Got to mail it in,There nothing wrong with it,THE NUMBERS MATCH ON BOX 14.Got to buy a stamp.
"New York is so broke they rejective Tubo tax e-file
Got to mail it in,There nothing wrong with it,THE NUMBERS MATCH ON BOX 14.Got to buy a stamp."
I got the same thing in AZ! They said my daughters SS# doesn't match.. The same one I've used for FOURTEEN YEARS with NO PROBLEM! Now, all the sudden it doesn't match?!
I call BULLSHIT!!!!
BK9K:
Your reasoning overlooks the fact that weak economies in the states mean weak revenues to the Federal Government and also more need for Federal funds. This automatically leads to more bond production, which debases the $ further.
Rather than worrying about whether 'deflation' or 'inflation' will occur simply ask: will these conditions result in more US bonds being auctioned or not?
If yes, then buy gold.
If there is a hard oil peg to the $USD, which I believe is the case, then bond yeilds are going to start reflecting real investor demand, not fake QE price support, as Ben is forced to abandon wanton printing.
Without the Fed comprising the majority of Treasury purchases, and interest rates start increasing, then the federal government is going to be caught in a vice just like the states and finally be forced to begin making budget cuts.
That is deflationary, spelt with a capital 'D'.
The only other alternative is to print. If the $USD is really caught in a hard oil beg, this option is only chimera. It worked for 12-14 months while the propaganda organs jaw-boned "green shoots" in an attempt to get the private sector to re-lever.
It failed; they shot their wad, but many still believe they've got some mystical powers to re-inflate. They don't. Hence, the debt-deflation tsunami.
Then the currency and everything is going to implode.
There is no way to stop a deflationary spiral except brute force devaluation.
A hard USD/oil peg could not be maintained. And, as oil production is declining worldwide, you have deflation built into a creditmoney system that is NOT based upon a commodity.
How would you reconcile a commodity peg on oil with the entire REST of the monetary base being debt-based? We're going to run out and pay off our debts with oil now, plus interest?
I am so happy I live in NJ. Go Jersey! I'll meet you all down the jersey shore with some new drinking game that will make you forget your troubles at home.
The states (while as irresponsible to some degree as everyone else) had zero to do with creating the subprime monster, CDSs, TBTF banks and everything else taxpayers have had to fund at the federal level. Any state with a "debt" to the federal government by reason of paying out huge unemployment benefits which are being paid by reason of the Great Recession, blame for which belongs first and foremost to federal regulators, Senate and House, Wall Street, and past and current presidents should, at the very least expect that bill to be marked "Thanks for the Banks Bailout - Paid In Full." Honor the debt? Give me a break. Just like all those banks will pay back what they stole from the taxpayer for their AIG bailout. Better fire up the printing press, boys.
Appreciate what you're saying, Ned - however state & local governments did make their own bed so to speak by buying into the "housing prices never decline" theory, and instead of responsibly saving for a rainy day with increased tax revenues created the larger & larger budgets that they are now desperately trying to support.
I sat in a township meeting last spring with a state representative who was lamenting the decrease in tax revenues & the impact it was having on budgeting. I looked her right in the eye & pointed out that "we lived fine with a much smaller budget in 1997 when I moved here, and the township has basically the exact same population". I asked her, "What is so different now, and what did we do with all the extra revenue?" Her response was, "We have a lot more infrastructure to support & services to provide than we used to..." That infrastructure includes things like new uneccessary public office buildings and a GIANT white elephant school (a "McHighschool", if you will).
My point is, state & local governments may not have directly caused a lot of the *stuff* we're dealing with now - but they mishandled themselves in dramatic fashion, and are greatly responsible for being in the shape they're in.
The SLuGs (state and local governments) mistook street corner jerk called Fed, the fiat drug dealer, for a parental figure - and now Fed wants to pimp US out (lost virginity, er, sovereignty) to his bankster cartel contacts because the SLuGs are in vicious debt circle.
It's fucking over.
You got it
+1000
there's some imagery...
brutal!
IE: most of your points are valid, however it is political suicide for a state or local government to accumulate a rainy-day fund. If they do it becomes an easy target for opposition candidates who will tell voters "this is your money!" and promise to return any surplus revenue as tax cuts.
That and you're just leaving money for the next guy to spend, making him look even better.
Noone recognizes the sensibility in saving for a rainy day. Noone votes for the guy that saved for a rainy day.
If I was a politician and I balanced the budget (by either cutting spending or raising taxes or some combination of both) what hope is there of me being reelected? The only way to political longevity is to spend now and hope that you're not the one in power when the music stops. It's looking like the music has almost stopped in quite a few places, but those in power are just trying to keep it playing for a bit longer.
The problem is endemic at ALL levels of government. If the highway superintendent has 10% of his budget left near the end of the fiscal year but nothing to spend it on, he'll INVENT something to spend it on before he 'saves' it. If he saves it then they'll just cut his budget by 10% next year as in their minds he obviously didn't 'need' it
anybody want popcorn?
Since our national 'leaders' in the DCNY zone of nuclear/printing press-armed unreality have shown that the proper value system is to ignore any contracts with losses, naturally states ought to do the same with any invoices from DC. They can always be repaid in, say, 2135 give or take a few years when the, er....asteroid mining revenues come in.
Yeah, asteroid mining. Cool. Now stop calling us.
since the problem is always someone else's senator...the solution is simple...term limits for all these professional politicians. We have them for president (thank goodness).
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